Consumers remain upbeat about economy
By Jing Ji (China Daily)
Updated: 2004-11-29 08:50

Chinese consumers remain among the most upbeat in the world about their economy, and with extra money in their purses as the New Year season approaches, new technology products are at the top of their shopping lists, according to the latest ACNielsen Consumer Confidence Study.

Conducted over the Internet in October, the ACNielsen Consumer Confidence Study surveyed 14,134 consumers in 28 markets across the Asia-Pacific region, Europe and the United States. The study aims to gauge consumer sentiment and confidence in the economy and to provide insight into consumer expenditure patterns and major concerns.

Across all markets surveyed, consumers in the Chinese mainland are still among the most optimistic about the local economy, with 65 per cent believing their economy has improved over the past six months. Across the Asia-Pacific region and globally, Singapore topped the list as the most confident, with 66 per cent, Hong Kong ranked third with 64 per cent.

Among the top 10 markets in the world most optimistic about the next 12 months, eight are located within the Asia-Pacific region. Topping the list was the Chinese mainland, with 78 per cent of consumers looking forward to further economic improvement over the coming year. Following closely behind were India (77 per cent) and Indonesia (76 per cent).

Across the Asia-Pacific region, when asked how consumers use spare cash after they have covered their living expenses, nearly half said they put it in savings or deposit accounts. In China, over 38 per cent of people surveyed claimed to save their extra money. Compared to the previous survey in which about 32 per cent of respondents claimed they would save their spare cash, this represents a remarkable increase in the proportion of people depositing their hard-earned money in banks.

"The number of Chinese consumers putting their money into savings accounts is expected to increase further as a result of the recent adjustment in bank saving interest rates," said Glen Murphy, managing director of ACNielsen China.

On October 29, China raised saving and lending rates in an attempt to curb inflation - the first time in a decade consumers experienced an interest rate increase.

Partly because of the lingering effect of the National Day holiday Golden Week sentiment, new technology and out-of-home entertainment both rank highly on Chinese consumers' shopping lists. The most popular ways consumers choose to spend extra money are on new technology (52 per cent), out-of-home entertainment (42 per cent), clothing (39 per cent), savings/deposits (38 per cent) and short local holidays (35 per cent).

"With Chinese consumers the most confident globally, they are increasingly willing to spend on luxuries for themselves, rather than investing their money in shares/mutual funds or pensions (17 per cent and 10 per cent respectively)," commented Glen Murphy.

"A passion for new technology and out-of-home entertainment is a reflection of the 'enjoy it while you can' mentality, quite prevalent among today's youth in China, and will be music to the ears of the technology and entertainment industries in the lead up to the Lunar New Year seasons."

The most notable change to Chinese consumers' shopping lists is a cooling of their willingness to spend on home improvement and decorations.

ACNielsen's previous survey showed 40 per cent of people spent spare cash on home improvements, whereas in this October's survey only a quarter of respondents said they would spend money on renovating their homes.

"The survey was conducted at a time when there was a lot of talk in the market about a potential increase in bank lending rates," Murphy said. "China adjusted the lending rate to curb skyrocketing property prices, which resulted in a cooling off in the real estate market. A drop in consumer interest in investing in home renovations may be a sign that the far-reaching impact of an interest rate hike has already begun to take effect."

Murphy further pointed out that "despite consumers' disinclination to spend spare funds on certain items, the Chinese remain buoyant about the economy, and the majority of them are still willing to spend on lifestyle items."

ACNielsen is the world's leading marketing information company. Offering services in more than 100 countries, the company provides measurement and analysis of marketplace dynamics and customer attitudes and behaviour.

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